Tags: Wien | 2013 | worse | cliff

Blackstone’s Wien: Markets Will Ail Next Year, Worse than in 2012

Friday, 23 Nov 2012 01:37 PM

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Don’t expect the U.S. economy and markets to rebound in 2013 — brace for them to possibly get worse, said Blackstone Advisory Partners Vice Chairman Byron Wien.

The fiscal cliff, Mideast tensions, the European debt crisis and disappointing earnings will bruise the economy and markets in 2013 if not addressed, making next year worse than this year.

“There are quite a few cross currents that we are going to have to deal with,” Wien told CNBC.

Editor's Note: 'It’s Curtains for the US' — Hear Unapologetic Warning from Prophetic Economist.

“You’ve got uncertainty about the economy generally and then you layer on top of that the fiscal cliff, the debt ceiling, the problems in the Middle East, the uncertainties in Europe, the Chinese transition — there is plenty to worry about.”

The fiscal cliff, a combination of tax hikes and spending cuts striking the economy at the same time early next year, could send the country into a recession next year if left unchecked by Congress.

Lawmakers could strike deal, though compromise would involve tax and spending reforms that would weigh on the economy next year even if a recession is avoided.

The Federal Reserve, meanwhile, can do little to speed up recovery, as the U.S. central bank has cut benchmark interest rates to near zero and flooded the economy with liquidity to keep borrowing costs low.

“I don’t think the Fed could fix it,” Wien told the network.

“Monetary policy has done its job.”

Wien believes the Standard & Poor’s 500 will rise to 1,500 by the end of this year, noting that he “continues to focus on the growth areas, pharmaceuticals and technology. And there are opportunities in higher-yield instruments, too.”

Federal Reserve Chairman Ben Bernanke has said that Congress and the White House must take the lead with fiscal reforms to pick up the pace of recovery.

However, should Congress steer the economy away from the cliff and take steps to narrow deficits and pay down debts, 2013 could shape up to be a good year.

“Currently, uncertainties about the situation in Europe and especially about the prospects for federal fiscal policy seem to be weighing on the spending decisions of households and businesses as well as on financial conditions. Such uncertainties will only be increased by discord and delay,” Bernanke said in a speech at the New York Economic Club.

“In contrast, cooperation and creativity to deliver fiscal clarity — in particular, a plan for resolving the nation’s longer-term budgetary issues without harming the recovery — could help make the new year a very good one for the American economy.”

Editor's Note: 'It’s Curtains for the US' — Hear Unapologetic Warning from Prophetic Economist.

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